People walk past a billboard for the Bored Ape Yacht Club NFT in Times Square on January 25, 2022.
Noam Galai | Getty Images
Sales of non-fungible tokens have jumped to over $17 billion in 2021, according to a new report from NFT data firm Nonfungible.com.
A study jointly conducted with research firm L’Atelier, owned by BNP Paribas, says NFT trading reached $17.6 billion last year, reflecting an impressive 21,000% growth from $82 million in 2020.
NFTs are tradable assets that keep track of who owns a particular digital item — say, a work of art or a video game avatar — on a blockchain. Last year they entered the mass consciousness widely.
The token, which is a collage of digital artist Beeple, has sold for a record $69 million at Christie’s, while popular collections such as the Bored Ape Yacht Club have attracted celebrity buyers from Jimmy Fallon to Snoop Dogg.
“We’ve seen exponential growth over the last year,” Gauthier Zuppinger, co-founder of Nonfungible.com, told CNBC.
Nonfungible.com’s number for total NFT transactions in 2021 is lower than some other estimates. An earlier forecast by analytics firm Chainalysis put the figure at more than $40 billion.
Zuppinger says this is due to the company’s own methodology for measuring legitimate NFT transaction volumes. Nonfungible.com’s data excludes transactions involving bots and fictitious trading, the practice where investors simultaneously buy and sell an asset to artificially inflate market activity.
While proponents see NFTs as a valuable way to prove ownership of digital content, critics say the market is being attracted to predatory behavior. Participants are often encouraged to speculate on prices, and evidence is emerging of their growing use for money laundering and other nefarious activities.
Transition to the “Metaverse”
According to research by Nonfungible.com, over 2.5 million crypto wallets were owned by people who own or trade NFTs in 2021, up from 89,000 a year earlier. The number of buyers has grown from 75,000 to 2.3 million.
According to the report, people have also become better at making money from NFTs, with investors generating a total of $5.4 billion in profits from NFT sales last year. According to Nonfungible.com, more than 470 wallets have been able to make profits in excess of $1 million.
The most popular NFT category was collectibles with $8.4 billion in sales. Gaming NFTs like Axie Infinity represented the second largest category with $5.2 billion in sales.
Later that year, the focus shifted to the so-called metaverse, with sales of digital earth and other projects in space reaching $514 million.
The hype around the metaverse—offered shared spaces where users can interact with virtual objects and with each other—gained momentum with Facebook’s rebranding as Meta and Nike’s purchase of virtual sneaker company RTFKT.
What’s next?
Looking ahead, Zuppinger doesn’t expect the total value of NFT transactions to soar this year. Volumes averaged about $687 million per week in 2022, he said, up from the fourth-quarter 2021 average of $620 million per week.
“The interesting thing is that we’re seeing fewer people, fewer buyers, fewer sales,” Zuppinger said.
“Perhaps the global community has shrunk due to speculation and a loss of interest in collectibles. But the global market is still very strong and the value of some of these assets continues to rise.”
Zuppinger predicts that more large companies and financial institutions will enter the market, and speculative assets will begin to disappear. In 2021, a number of major brands, including Visa and Nike, have supported the NFT idea.